Hey everyone, welcome back! Today, I want to walk you through a common pricing strategy developers use when marketing pre-sale condos. I recently came across two floor plans for the same development, both measuring 547 square feet, yet one is priced at $474,000 while the other is $115,000 more expensive. In this post, I’ll break down why this happens and why you should be cautious before making a purchase decision.

Understanding the Price Difference

Let’s start with the first unit: a one-bedroom, one-bathroom condo with a walk-in closet, an L-shaped kitchen, and a large 124-square-foot balcony. It’s a well-designed space priced at $474,000, which comes out to roughly $920 per square foot. Given the location and the developer, this seems like a solid investment with good potential for appreciation.

Now, let’s look at the second unit, which the developer is marketing as a junior two-bedroom. Despite this label, it is the exact same size—547 square feet—yet priced at $579,900. The only real difference? The layout has been slightly altered to include a small second room without a window, eliminating the walk-in closet for the primary bedroom and replacing it with a smaller one.

Here’s the catch: that extra “bedroom” doesn’t meet the MLS requirements for a true two-bedroom unit because it has no window. This means that when it comes time to resell, you’re unlikely to find a buyer willing to pay a premium for what is essentially the same square footage as a one-bedroom unit.

Why Paying a Premium Doesn’t Pay Off

Developers use creative marketing techniques to justify a higher price, but in reality, you are not getting more value. Here’s why overpaying for a “junior two-bedroom” doesn’t make sense:

1. You Won’t Recover the Extra Cost

The person who buys the one-bedroom unit at $474,000 is likely to see appreciation over time, while the buyer who pays $105,000 more for the junior two-bedroom will struggle to recoup that premium. Even if the unit can generate slightly more rent, it won’t be enough to justify the inflated purchase price.

2. Appraisal Issues Will Hurt Your Investment

Many investors who overpay for pre-sale condos are shocked when their units appraise for less than what they paid. If your unit is valued at, say, $1,100 per square foot instead of the $1,250 you paid, you’ll have to cover the difference at closing—a significant financial burden.

3. Future Resale Will Be Challenging

When you eventually list the unit for sale, the MLS will categorize it as a one-bedroom plus den, not a true two-bedroom. Buyers searching for a two-bedroom condo won’t even see your listing, and those who do will compare it against larger, more functional two-bedroom units. This makes it much harder to justify the price premium you initially paid.

4. Developers Don’t Need Approval to Market It This Way

Unlike official MLS listings, developers don’t need approval to call a unit a “junior two-bedroom.” They rely on sales tactics to convince buyers they’re getting more value, but in reality, the square footage remains the same.

What to Look for Instead

If you’re shopping for a pre-sale condo, here’s how to make sure you’re getting the best value for your money:

• Focus on price per square foot, not marketing labels. A well-priced one-bedroom unit often makes a better investment than an overpriced “junior two-bedroom.”

• Look for real added value. If a unit is truly larger (e.g., 650+ square feet), a price premium might be justified. Otherwise, be skeptical of inflated pricing.

• Think about resale. Will future buyers see the unit as a true two-bedroom? If not, they won’t pay a two-bedroom price.

• Work with a knowledgeable pre-sale expert. An experienced agent can help you navigate these marketing tactics and ensure you make a smart investment.

The Takeaway

I have no issue with developers maximizing their returns—it’s part of their business. But I do take issue when agents market overpriced floor plans as “great investments” to unsuspecting buyers. If you’re considering a pre-sale purchase, be diligent, do the math, and don’t fall for gimmicks.

If you have questions about pre-sales or want to discuss potential investments, feel free to reach out—I’m happy to help!